[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3886 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 3886

   To combat international money laundering, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 9, 2000

   Mr. Leach (for himself, Mr. LaFalce, Mrs. Roukema, and Mr. Vento) 
 introduced the following bill; which was referred to the Committee on 
                     Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
   To combat international money laundering, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION. 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``International 
Counter-Money Laundering Act of 2000''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
        TITLE I--INTERNATIONAL COUNTER-MONEY LAUNDERING MEASURES

Sec. 101. Special measures for jurisdictions, financial institutions, 
                            or international transactions of primary 
                            money laundering concern.
    TITLE II--CURRENCY TRANSACTION REPORTING AMENDMENTS AND RELATED 
                              IMPROVEMENTS

Sec. 201. Amendments relating to reporting of suspicious activities.
Sec. 202. Penalties for violations of geographic targeting orders and 
                            certain recordkeeping requirements, and 
                            lengthening effective period of geographic 
                            targeting orders.
Sec. 203. Authorization to include suspicions of illegal activity in 
                            written employment references.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds as follows:
            (1) International money laundering provides the financial 
        fuel that permits international criminal enterprises to conduct 
        and expand their operations to the detriment of the safety and 
        security of American citizens.
            (2) Money launderers subvert legitimate financial 
        mechanisms and banking relationships by using them as 
        protective covering for the movement of criminal proceeds and, 
        by so doing, can undermine the integrity of our financial 
        institutions and of the global financial and trading systems 
        upon which our prosperity and growth depend.
            (3) Money launderers rely upon the existence and use of 
        certain jurisdictions outside the United States that offer bank 
        secrecy and special tax or regulatory advantages to 
        nonresidents, and often complement those advantages with weak 
        financial supervisory and regulatory regimes.
            (4) Certain kinds of transactions involving such offshore 
        jurisdictions--for example, those transactions specifically 
        designed to offer anonymity or the avoidance of regulatory 
        scrutiny--make it even more difficult for law enforcement and 
        regulators to follow the trail of money earned by criminals who 
        traffic in human misery, whether they are narcotics dealers, 
        pornographers, terrorists, arms smugglers, or those whose 
        frauds prey upon law abiding citizens.
            (5) Certain banking relationships between financial 
        institutions in the United States and financial institutions 
        located in such offshore jurisdictions, such as correspondent 
        and payable-through accounts, are particularly vulnerable to 
        abuse because of the difficulty in obtaining accurate 
        information about the beneficial owners whose funds pass 
        through such accounts.
            (6) The ability to mount effective counter-measures to 
        international money launderers requires national, as well as 
        bilateral and multilateral action, using tools specially 
        designed for that use.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To ensure that banking transactions and financial 
        relationships, the conduct of such transactions and 
        relationships, or both, do not contravene the purposes of 
        subchapter II of chapter 53 of title 31, United States Code, 
        section 21 of the Federal Deposit Insurance Act, and chapter 2 
        of title I of Public Law 91-508, or facilitate the evasion of 
        any such provision, to ensure that the purposes of such 
        subchapter II continue to be fulfilled, and to guard against 
        international money laundering and other financial crimes.
            (2) To provide a clear national mandate for subjecting to 
        special scrutiny those foreign jurisdictions, financial 
        institutions operating outside the United States, and classes 
        of international transactions that pose particular, 
        identifiable opportunities for money laundering.
            (3) To provide the Secretary of the Treasury with broad 
        discretionary authority to take certain measures tailored to 
        the particular money laundering problems presented by specific 
        foreign jurisdictions, financial institutions operating outside 
        the United States, and classes of international transactions.
            (4) To provide domestic financial institutions with 
        guidance on which foreign jurisdictions, financial institutions 
        operating outside the United States, and classes of 
        international transactions are of primary money laundering 
        concern to the United States government.
            (5) To encourage the filing of suspicious activity reports 
        by financial institutions by improving the terms of the safe 
        harbor from civil liability for filing such reports.
            (6) To strengthen the Secretary's authority to issue and 
        administer geographic targeting orders, and to clarify that 
        violations of such orders or any other requirement imposed 
        under the authority contained in chapter 2 of title I of Public 
        Law 91-508 and subchapters II and III of chapter 53 of title 
        31, United States Code, may result in criminal and civil 
        penalties.
            (7) To strengthen the ability of financial institutions to 
        maintain the integrity of their employee population.

        TITLE I--INTERNATIONAL COUNTER-MONEY LAUNDERING MEASURES

SEC. 101. SPECIAL MEASURES FOR JURISDICTIONS, FINANCIAL INSTITUTIONS, 
              OR INTERNATIONAL TRANSACTIONS OF PRIMARY MONEY LAUNDERING 
              CONCERN.

    (a) In General.--Subchapter II of chapter 53 of title 31, United 
States Code, is amended by inserting after section 5318 the following 
new section:
``Sec. 5318A. Special measures for jurisdictions, financial 
              institutions, or international transactions of primary 
              money laundering concern
    ``(a) International Counter-Money Laundering Requirements.--
            ``(1) In general.--The Secretary may require domestic 
        financial institutions and domestic financial agencies to take 
        1 or more of the special measures described in subsection (b) 
        if the Secretary finds that reasonable grounds exist for 
        concluding that a jurisdiction outside the United States, 1 or 
        more financial institutions operating outside the United 
        States, or 1 or more classes of transactions within or 
        involving a jurisdiction outside the United States is of 
        primary money laundering concern, in accordance with subsection 
        (c).
            ``(2) Form of requirement.--The special measures described 
        in subsection (b) may be imposed by regulation, order, or 
        otherwise as permitted by law, and in such sequence or 
        combination, as the Secretary shall determine.
            ``(3) Process.--
                    ``(A) In general.--In selecting which special 
                measure or measures to take under this subsection, the 
                Secretary shall consult with the Chairman of the Board 
                of Governors of the Federal Reserve System.
                    ``(B) Factors.--The Secretary also shall consider--
                            ``(i) whether similar action has been or is 
                        being taken by other nations or multilateral 
                        groups;
                            ``(ii) whether the imposition of any 
                        particular special measure would create a 
                        significant competitive disadvantage for 
                        financial institutions organized in the United 
                        States; and
                            ``(iii) the extent to which the action 
                        would have a significant adverse systemic 
                        impact on the international payment, clearance 
                        and settlement system, or on legitimate 
                        business activities involving the particular 
                        jurisdiction.
            ``(4) No limitation on other authority.--This section shall 
        not be construed as superseding or otherwise restricting any 
        other authority granted to the Secretary, or to any other 
        agency, by this subchapter or otherwise.
    ``(b) Special Measures.--The special measures referred to in 
subsection (a), with respect to a jurisdiction outside the United 
States, financial institution operating outside the United States, or 
class of transaction within or involving a jurisdiction outside the 
United States, are as follows:
            ``(1) Recordkeeping and reporting of certain financial 
        transactions.--
                    ``(A) In general.--The Secretary may require a 
                domestic financial institution or domestic financial 
                agency to maintain records, file reports, or both, 
                concerning the aggregate amount of transactions, or 
                concerning each transaction, with respect to a 
                jurisdiction outside the United States, 1 or more 
                financial institutions operating outside the United 
                States, or 1 or more classes of transactions within or 
                involving a jurisdiction outside the United States, if 
                the Secretary finds any such jurisdiction, institution, 
                or transaction to be of primary money laundering 
                concern.
                    ``(B) Form of records and reports.--Such records 
                and reports shall be made and retained at such time, in 
                such manner, and for such period of time, as the 
                Secretary shall determine, and shall include such 
                information as the Secretary may determine, including--
                            ``(i) the identity and address of the 
                        participants in a transaction or relationship, 
                        including the identity of the originator of any 
                        funds transfer;
                            ``(ii) the legal capacity in which a 
                        participant in any transaction is acting;
                            ``(iii) the identity of the beneficial 
                        owner of the funds involved in any transaction; 
                        and
                            ``(iv) a description of any transaction.
            ``(2) Identification of beneficial owner.--The Secretary 
        may require any domestic financial institution or domestic 
financial agency to obtain and retain information concerning the 
identity of each beneficial owner, and any agent of such beneficial 
owner, of any account opened or maintained in the United States by a 
foreign person (other than a foreign entity some or all of whose shares 
are publicly-traded), or a representative of such a foreign person, 
that involves a jurisdiction outside the United States, 1 or more 
financial institutions operating outside the United States, or 1 or 
more classes of transactions within or involving a jurisdiction outside 
the United States, if the Secretary finds any such jurisdiction, 
institution, or transaction to be of primary money laundering concern.
            ``(3) Information relating to certain payable-through 
        accounts.--If the Secretary finds a jurisdiction outside the 
        United States, 1 or more financial institutions operating 
        outside the United States, or 1 or more classes of transactions 
        within or involving a jurisdiction outside the United States to 
        be of primary money laundering concern, the Secretary may 
        require any domestic financial institution or domestic 
        financial agency that opens or maintains a payable-through 
        account in the United States for a foreign financial 
        institution involving any such jurisdiction or any such 
        financial institution operating outside the United States, or a 
        payable-through account through which any such transaction may 
        be conducted, as a condition of opening or maintaining such 
        account, to--
                    ``(A) identify each customer (and representative of 
                such customer) of such financial institution who is 
                permitted to use, or whose transactions are routed 
                through, such payable-through account; and
                    ``(B) obtain, with respect to each such customer 
                (and each such representative), the same information 
                that the depository institution obtains in the ordinary 
                course of business with respect to customers residing 
                in the United States.
            ``(4) Information relating to certain correspondent 
        accounts.--If the Secretary finds a jurisdiction outside the 
        United States, 1 or more financial institutions operating 
        outside the United States, or 1 or more classes of transactions 
        within or involving a jurisdiction outside the United States to 
        be of primary money laundering concern, the Secretary may 
        require any domestic financial institution or domestic 
        financial agency that opens or maintains a correspondent 
        account in the United States for a foreign financial 
        institution involving any such jurisdiction or any such 
        financial institution operating outside the United States, or a 
        correspondent account through which any such transaction may be 
        conducted, as a condition of opening or maintaining such 
        account, to--
                    ``(A) identify each customer (and representative of 
                such customer) of any such financial institution who is 
                permitted to use, or whose transactions are routed 
                through, such correspondent account; and
                    ``(B) obtain, with respect to each such customer 
                (and each such representative), the same information 
                that the depository institution obtains in the ordinary 
                course with respect to customers residing in the United 
                States.
            ``(5) Prohibitions or conditions on opening or maintaining 
        certain correspondent or payable-through accounts.--If the 
        Secretary finds a jurisdiction outside the United States, 1 or 
        more financial institutions operating outside the United 
        States, or 1 or more classes of transactions within or 
        involving a jurisdiction outside the United States to be of 
        primary money laundering concern, the Secretary, in 
        consultation with the Secretary of State and the Attorney 
        General, may prohibit, or impose conditions upon, the opening 
        or maintaining in the United States of a correspondent account 
        or payable-through account by a domestic financial institution 
        or domestic financial agency for or on behalf of a foreign 
        banking institution if such correspondent account or payable-
        through account involves any such jurisdiction or institution, 
        or if any such transaction may be conducted through such 
        correspondent account or payable-through account.
    ``(c) Information To Be Considered in Finding Jurisdictions, 
Institutions, or Transactions To Be of Primary Money Laundering 
Concern.--
            ``(1) In general.--In making a finding that reasonable 
        grounds exist for concluding that a jurisdiction outside the 
        United States, 1 or more financial institutions operating 
        outside the United States, or 1 or more classes of transactions 
        within or involving a jurisdiction outside the United States is 
        of primary money laundering concern so as to allow the 
        Secretary to invoke 1 or more of the special measures of 
        subsection (b), the Secretary shall consult with the Secretary 
        of State and the Attorney General.
            ``(2) Information.--The Secretary also shall consider such 
        information as the Secretary considers to be relevant, 
        including the following potentially relevant factors:
                    ``(A) In the case of a particular jurisdiction--
                            ``(i) the extent to which that jurisdiction 
                        or financial institutions operating therein 
                        offer bank secrecy or special tax or regulatory 
                        advantages to nonresidents or nondomiciliaries 
                        of such jurisdiction;
                            ``(ii) the substance and quality of 
                        administration of the jurisdiction's bank 
                        supervisory and counter-money laundering laws;
                            ``(iii) the relationship between the volume 
                        of financial transactions occurring in that 
                        jurisdiction and the size of the jurisdiction's 
                        economy;
                            ``(iv) the extent to which the jurisdiction 
                        is characterized as a tax haven or offshore 
                        banking or secrecy haven by credible 
                        international organizations or multilateral 
                        expert groups; and
                            ``(v) the experience of United States law 
                        enforcement officials, regulatory officials, 
                        and tax administrators in obtaining information 
                        about transactions originating in or routed 
                        through or to such jurisdictions;
                    ``(B) In the case of a decision to apply 1 or more 
                of the special measures described in subsection (b) 
                only to a financial institution or institutions, or to 
                a transaction or class of transactions, or to both, 
                within or involving a particular jurisdiction--
                            ``(i) the extent to which such financial 
                        institutions or transactions are used to 
                        facilitate or promote money laundering in or 
                        through the jurisdiction;
                            ``(ii) the extent to which such 
                        institutions or transactions are used for 
                        legitimate business purposes in such 
                        jurisdiction; and
                            ``(iii) the extent to which such action is 
                        sufficient to ensure, with respect to 
                        transactions involving such jurisdiction and 
                        institutions operating in such jurisdiction, 
                        that the purposes of this subchapter continue 
                        to be fulfilled, and to guard against 
                        international money laundering and other 
                        financial crimes.
    ``(d) Definitions.--Notwithstanding any other provision of this 
subchapter, for purposes of this section, the following definitions 
shall apply:
            ``(1) Defined terms.--
                    ``(A) Bank definitions.--The following definitions 
                shall apply with respect to a bank:
                            ``(i) Account.--The term `account'--
                                    ``(I) means a formal banking or 
                                business relationship established to 
                                provide regular services, dealings, and 
                                other financial transactions; and
                                    ``(II) includes a demand deposit, 
                                savings deposit, or other transaction 
                                or asset account and a credit account 
                                or other extension of credit.
                            ``(ii) Correspondent account.--The term 
                        `correspondent account' means an account 
                        established to receive deposits from and make 
                        payments on behalf of a correspondent bank.
                            ``(iii) Correspondent bank.--The term 
                        `correspondent bank' means a depository 
                        institution that accepts deposits from another 
                        financial institution and provides services on 
                        behalf of such other financial institution.
                    ``(B) Definitions applicable to institutions other 
                than banks.--With respect to any financial institution 
                other than a bank, the Secretary shall define, by 
                regulation, order, or otherwise as permitted by law, 
                the term `account' and shall include within the meaning 
                of such term arrangements similar to payable-through 
                and correspondent accounts.
            ``(2) Other terms.--The Secretary may, by regulation, 
        order, or otherwise as permitted by law, further define the 
        terms in paragraph (1) and define other terms for the purposes 
        of this section, as the Secretary deems appropriate.''.
    (b) Clerical Amendment.--The table of sections for subchapter II of 
chapter 53 of title 31, United States Code, is amended by inserting 
after the item relating to section 5318 the following new item:

``5318A. Special measures for jurisdictions, financial institutions, or 
                            international transactions of primary money 
                            laundering concern.''.

    TITLE II--CURRENCY TRANSACTION REPORTING AMENDMENTS AND RELATED 
                              IMPROVEMENTS

SEC. 201. AMENDMENTS RELATING TO REPORTING OF SUSPICIOUS ACTIVITIES.

    (a) Amendment Relating to Civil Liability Immunity for 
Disclosures.--Section 5318(g)(3) of title 31, United States Code, is 
amended to read as follows:
            ``(3) Liability for disclosures.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law--
                            ``(i) any financial institution that--
                                    ``(I) makes a voluntary disclosure 
                                of any possible violation of law or 
                                regulation to a government agency; or
                                    ``(II) makes a disclosure pursuant 
                                to this subsection or any other 
                                authority;
                            ``(ii) any director, officer, employee, or 
                        agent of such institution who makes, or 
                        requires another to make any such disclosure; 
                        and
                            ``(iii) any independent public accountant 
                        who audits any such financial institution and 
                        makes a disclosure described in clause (i),
                shall not be liable to any person under any law or 
                regulation of the United States, any constitution, law, 
                or regulation of any State or political subdivision of 
                any State, or under any contract or other legally 
                enforceable agreement (including any arbitration 
                agreement), for such disclosure or for any failure to 
                notify the person who is the subject of such disclosure 
                or any other person identified in the disclosure.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a disclosure or communication required under Federal 
                securities law, other than provisions of law that 
                specifically refer to subchapter II of chapter 53 of 
                title 31, United States Code.
                    ``(C) Rule of construction.--Subparagraph (A) shall 
                not be construed as creating--
                            ``(i) any inference that the term `person', 
                        as used in such subparagraph, may be construed 
                        more broadly than its ordinary usage so to 
                        include any government or agency of government; 
                        or
                            ``(ii) any immunity against, or otherwise 
                        affecting, any civil or criminal action brought 
                        by any government or agency of government to 
                        enforce any constitution, law, or regulation of 
                        such government or agency.''
    (b) Prohibition on Notification of Disclosures.--Section 5318(g)(2) 
of title 31, United States Code, is amended to read as follows:
            ``(2) Notification prohibited.--
                    ``(A) In general.--If a financial institution, any 
                director, officer, employee, or agent of any financial 
                institution, or any independent public accountant who 
                audits any financial institution, voluntarily or 
                pursuant to this section or any other authority, 
                reports a suspicious transaction to a government 
                agency--
                            ``(i) the financial institution, director, 
                        officer, employee, agent, or accountant may not 
                        notify any person involved in the transaction 
                        that the transaction has been reported; and
                            ``(ii) no officer or employee of the 
                        Federal Government or of any state, local, 
                        tribal, or territorial government within the 
                        United States, who has any knowledge that such 
                        report was made may disclose to any person 
                        involved in the transaction that the 
                        transaction has been reported other than as 
                        necessary to fulfill any such person's duties 
                        as required by law.
                    ``(B) Disclosures in certain employment 
                references.--Notwithstanding the application of 
                subparagraph (A) in any other context, subparagraph (A) 
                shall not be construed as prohibiting any financial 
                institution, or any director, officer, employee, or 
                agent of such institution, from including, in a written 
                employment reference that is provided in accordance 
                with section 18(v) of the Federal Deposit Insurance Act 
                in response to a request from another financial 
                institution or a written termination notice or 
                employment reference that is provided in accordance 
                with the rules of the self-regulatory organizations 
                registered with the Securities and Exchange Commission, 
                information that was included in a report to which 
                subparagraph (A) applies, but such written employment 
                reference may not disclose that such information was 
                also included in any such report or that such report 
                was made.''.

SEC. 202. PENALTIES FOR VIOLATIONS OF GEOGRAPHIC TARGETING ORDERS AND 
              CERTAIN RECORDKEEPING REQUIREMENTS, AND LENGTHENING 
              EFFECTIVE PERIOD OF GEOGRAPHIC TARGETING ORDERS.

    (a) Civil Penalty for Violation of Targeting Order.--Section 
5321(a)(1) of title 31, United States Code, is amended--
            (1) by inserting ``or order issued'' after ``subchapter or 
        a regulation prescribed''; and
            (2) by inserting ``, or willfully violating a regulation 
        prescribed under section 21 of the Federal Deposit Insurance 
        Act or section 123 of Public Law 91-508,'' after ``section 5314 
        and 5315)''.
    (b) Criminal Penalties for Violation of Targeting order.--Section 
5322 of title 31, United States Code, is amended--
            (1) in subsection (a)--
                    (A) by inserting ``or order issued'' after 
                ``willfully violating this subchapter or a regulation 
                prescribed''; and
                    (B) by inserting ``, or willfully violating a 
                regulation prescribed under section 21 of the Federal 
                Deposit Insurance Act or section 123 of Public Law 91-
                508,'' after ``under section 5315 or 5324),'';
            (2) in subsection (b)--
                    (A) by inserting ``or order issued'' after 
                ``willfully violating this subchapter or a regulation 
                prescribed''; and
                    (B) by inserting ``or willfully violating a 
                regulation prescribed under section 21 of the Federal 
                Deposit Insurance Act or section 123 of Public Law 91-
                508,'' after ``under section 5315 or 5324),''.
    (c) Structuring Transactions To Evade Targeting Order or Certain 
Recordkeeping Requirements.--Section 5324(a) of title 31, United States 
Code, is amended--
            (1) by inserting a comma after ``shall'';
            (2) by striking ``section--'' and inserting ``section, the 
        reporting or recordkeeping requirements imposed by any order 
        issued under section 5326, or the recordkeeping requirements 
        imposed by any regulation prescribed under section 21 of the 
        Federal Deposit Insurance Act or section 123 of Public Law 91-
        508--'';
            (3) in paragraph (1) by inserting ``, to file a report or 
        to maintain a record required by an order issued under section 
        5326, or to maintain a record required pursuant to any 
        regulation prescribed under section 21 of the Federal Deposit 
        Insurance Act or section 123 of Public Law 91-508'' after 
        ``regulation prescribed under any such section''; and
            (4) in paragraph (2) by inserting ``, to file a report or 
        to maintain a record required by any order issued under section 
        5326, or to maintain a record required pursuant to any 
        regulation prescribed under section 5326, or to maintain a 
        record required pursuant to any regulation prescribed under 
        section 21 of the Federal Deposit Insurance Act or section 123 
        of Public Law 91-508,'' after ``regulation prescribed under any 
        such section''.
    (d) Lengthening Effective Period of Geographic Targeting Orders.--
Section 5326(d) of title 31, United States Code, is amended by striking 
``60'' after ``shall be effective for more than'' and inserting 
``180''.

SEC. 203. AUTHORIZATION TO INCLUDE SUSPICIONS OF ILLEGAL ACTIVITY IN 
              WRITTEN EMPLOYMENT REFERENCES.

    Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is 
amended by adding at the end the following new paragraph:
    ``(v) Written Employment References May Contain Suspicions of 
Involvement in Illegal Activity.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, any insured depository institution, and any director, 
        officer, employee, or agent of such institution, may disclose 
        in any written employment reference relating to a current or 
        former institution-affiliated party of such institution which 
        is provided to another insured depository institution in 
        response to a request from such other institution, information 
        concerning the possible involvement of such institution-
        affiliated party in potentially unlawful activity.''
                                 <all>